DON'T BANK ON THIS FITZGERALD VOTE

WASHINGTON -- As a former bank lawyer and director, Sen. Peter Fitzgerald is one of the few members of Congress with firsthand knowledge of the financial services industry.

But Sen. Fitzgerald says he will "probably" step aside when the landmark bill designed to lift Depression-era barriers between banking, insurance and securities firms soon reaches the Senate floor in what's expected to be a close vote.

That's because Illinois' junior senator is also a millionaire with the bulk of his wealth tied to a $25-million-plus stake in Bank of Montreal, the parent of Harris Bank, which acquired his family's Suburban Bancorp Inc. chain in 1994. He also has stock in several other Chicago-area banks.

"I am unlikely to vote on the bank bill because I'm an owner of bank stock," the senator says. "If I perceive there's a conflict of interest, I will either vote 'present' or not vote at all."

His hands-off approach is troubling to Illinois financial services lobbyists, who have waited almost a decade to achieve consensus on the financial modernization bill. It passed the House Banking Committee earlier this month by a 51-8 vote, while a similar measure cleared the Senate banking panel by only an 11-9 margin, with voting largely along party lines.

"We'd like to see him engaged on banking issues," says Jeff Rodman, executive vice-president of the Illinois Bankers Assn. "We hope he will look at it and find a way he can be engaged on these issues."

While Sen. Fitzgerald talked during the campaign about setting up a blind trust for his bank holdings to defuse any potential or real conflicts of interest, he hasn't done so. "I haven't fully investigated that option yet," he says.

No violation of rules

However, a blind trust isn't likely to help. His family would still collectively remain among the largest non-institutional shareholders of Bank of Montreal, leaving Sen. Fitzgerald with the same appearance of a conflict when it comes to banking legislation.

"His family makes it a moot point," says Paul Hendrie, communications director of the Center for Responsive Politics, a Washington, D.C.-based non-profit think tank on money and politics.

Sen. Fitzgerald's problem isn't the Senate ethics rules, which narrowly define the circumstances in which a senator must abstain from voting. For instance, a pig farmer can vote on pig-farming legislation, the Senate ethics committee has ruled.

"There's no violation of the conflict-of-interest rules here, as far as I can see," says Gary Ruskin, director of the non-profit Congressional Accountability Project, a self-styled ethics watchdog here.

The rules are such that some senators have set up blind trusts while others "have crafted legislation that clearly affected their holdings," he adds. "It's all over the map."

As in Springfield, where Sen. Fitzgerald made a point of not voting on legislation that affected the banking industry, his real concern is to avoid the appearance of a conflict of interest.

Even so, his opponents and at least one critic have questioned whether Sen. Fitzgerald always maintained his self-imposed purity. "He ducked and dodged the issue throughout the campaign, and now the chickens are coming home to roost," says Vic Crown, assistant editor of Illinois Politics.

The 10,000-subscriber, Park Ridge-based monthly has written extensively about cases in which Sen. Fitzgerald purportedly voted on banking-related bills. But many, if not most, of his votes had only a tangential relationship to banking issues, such as bills affecting credit unions or savings and loan associations, and banking lobbyists have often bemoaned his lack of support for their issues.

Even so, Sen. Fitzgerald seems highly sensitive to the criticism, even as he vehemently objects to the points raised by Illinois Politics.

"It's hard to tell sometimes whether a law would benefit you individually or not," says the senator. "If there's any doubt at all, I'd rather err on the side of caution."

Although the banking bill now has broad industry support, a last-minute controversy over restrictions on the Community Reinvestment Act (CRA) -- a non-issue until late last year -- could make it a close vote in the Senate.

Probably enough votes

Democrats argue that regulators' periodic ratings of banks' community involvement have spurred investment and loans in areas that badly need capital. But most Republicans, led by Senate Banking Committee Chairman Phil Gramm, R-Texas, argue that CRA allows community groups to "extort" money from banks by threatening to file objections to banks seeking mergers.

Although Republicans, with their 55-45 Senate majority, probably have enough votes to pass the bill without Sen. Fitzgerald, the likelihood of a partisan battle could mean a filibuster, which would probably doom the measure.

To stop a filibuster, "the magic number is 60" votes, notes Paul Schosberg, president and CEO of America's Community Bankers, a Washington, D.C.-based lobbying group for thrifts and savings banks. "From a broad, public policy sense, I don't see an overriding need (for Sen. Fitzgerald) to recuse himself."

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